Peter Thiel the co-founder of Paypal and the giant in the tech industry has some great ideas that could benefit the gaming world, in this video, we would like to explore with you some of the ideas in his book Zero to One, but before that, we would like to remind you to subscribe to our channel and hit the like button. Helping our channel to grow will allow us to expand and create more videos.

Back to Peter Thiel.

Coming up with a new concept in gaming or in general can only be one of two things, horizontal progress: take something that works and improve it.

We call this kind of progress a 1 to N progress.

Or it can be vertical progress, vertical here means doing something no one has imagined before. we call this kind of progress a zero to one progress. 

Vertical progress or zero to one is harder to achieve.

If you take, a first-person shooter game and incrementally improve it at an annual basis then you’re only making a 1 to n progress, a horizontal one. 

But if you create a battle Royale system to redefine the genre, then it’s a 0 to one progress.

Academia and all the overvalued MBA degrees focus on creating models for running businesses and companies to make them profitable, I say ignore the paths that are laid out there by academics, don’t forget that the arrow of knowledge comes first from practice in the real world and then it gets documented in the academic works. 

People mistake the arrow of knowledge and think it stems from academia into practice, in reality, it’s the other way around. It’s practitioners who discover things through tinkering, trial and error and once their discoveries prove to be valuable they get documented in academia and lectures halls.

Running a gaming studio with an academic mindset will only look at past models and theories of what has worked and theorize on how to optimize them, in other words it will barely take us from one to N, only fresh minds which are not polluted by the myth of academia as a source of innovation and don’t take pseudosciences like social sciences too seriously are capable of making a zero to one innovation. 

Let’s explore a clear example of a One to N gaming studio, Quantic Dream, they only making horizontal progress in their games. Compare the core mechanics of any of their games to games like Broken Sword or Monkey Island, the similarities are too many to ignore.

If there’s something in common between all games that have shaped the industry in the last 30 years, then it’s that they are all games that took the industry from zero to one, 

Zelda, Gran Turismo, The Sims, World of Warcraft, Metal Gear and even Tetris.

games that expanded horizontally on existing ideas don’t stand the test of time.

The half-life series even after all these years is still adored by its fans, including yours truly. 

The hunger for that zero to one jump is still there and gamers are still waiting for Episode 3. Have you ever wondered why that desire for the next installment has never ceased even after the release of hundreds and hundreds of other first-person shooters since Half life 2 episode 2 was released? it’s the zero to one change that the game brought with it that gamers crave.

Through Half-Life, gamers experienced for the first time a story from start to finish through the eyes of the protagonist, and interact physically with objects around them in the game like never before.

You might think it’s easy to allocate resources and invest in new ideas if it’s a big firm with big pockets, but numbers and observation tell us a different story. In recent years the 0 to 1 jump keeps on happening in the indie world.

Zero to one is the small studio’s only chance of making a dent in the industry, optimizing an existing model is a no-go, for it requires competition with the giants of the industry who do nothing really other than allocating their resources at polishing and optimizing existing models. 

The next game that dethrones call of duty as the most popular shooter won’t be an optimized call of duty, but something totally new.

A point EA seems not to get in its strategy of chasing already working models, from the Battlefield series which tries to be a better call of duty, Anthem which tries to do the same with Destiny, Apex with overwatch.

Just because the 1 to N formula works for them in their sports games they blindly apply it to non-sport games.

If Peter Thiel were to run a gaming studio, the first thing he would do is to ignore the marketing department. Marketing people don’t like new things, they prefer familiar names and formulas that can be quickly grasped and understood by consumers.

Have you ever wondered why in recent decades less and less new original big-budget films are being made and we more and more sequels of known names appear?

One factor is the emergence of new big markets for movies like China, Russia, and Brazil but I’ll let Lynda Obst, the producer of beautiful original films like Contact and interstellar answer that question.

In her book, Sleepless in Hollywood, about why Hollywood has lost its originality i.e. zero to one and stuck to 1 to N models instead, she explains:

“We can’t afford to market a movie, an original movie, the way we do domestically, internationally.

we buy tons and tons of television advertising, tons and tons of trailers. And we penetrate all of America to create word of mouth. Well, there’s no possible way that you can afford to do that around the world.  That’s just incalculably expensive.

So we need pre-awareness. We need people to know our title, to know the name of the movie, to be familiar with it before it’s even marketed. So that means either a movie star’s name. That’s one form of pre-awareness. But increasingly what that means is the name of the title.

Superman, Batman, Pirates of the Caribbean Man. Any man movie, any comic book hero that we’ve grown up with – Harry Potter, any title with that kind of international recognition”

So, Hollywood has decided that the path of Zero to one is expensive to market and the safest way is to stick to the one to N model. 

The same is happening in the gaming world, more Battlefields, more Call of Duties, Assassin Creeds and our last hope is still with you our dear indie developers, you are the last bet for the Zero to one in our beloved industry.

All the big industries are engulfed by the one to N mentality that argues for sticking to what is easy to market. 

In the music industry each year we hear singers with almost identical voices, identical melodies, and identical themes as if they all come from the same cookie cutter:

I’m sure If I play you this short clip and told you to guess the name of the singer, I’ll get hundreds of different names but they’ll all have identical voices. 1 to N creates a culture of conformity and kills innovation. Sadly this is where we are heading with many aspects of our lives.

The way Peter Thiel perceives creating a zero to one business is highly impacted by the 2000 dot-com bubble.

People like to point to it as the height of pushing zero to one ideas and testing them in the market through IPOs.

After the bubble has burst, many questioned that model and embraced sticking to incremental changes to what already works i.e. 1 to N.

The problem is that during the dot-com bubble many companies did not actually propose any real zero to one vertical processes in the first place. At the height of the mania, beverages and non-tech companies started to slab the com or net sticker on their names to see their stock prices soar the next day.

Some were even planning to put their startups on public offerings before thinking what their companies are actually going to produce.

Blaming zero to one seems to be the wrong lesson to learn from the 2000 bubble.

The problem with 1 to N products is competition. Your starting point is working on an already existing product or concept used by someone else and financially it ends up becoming a race to the bottom.

I’ll let Peter Thiel himself give an example:

“U.S. airline companies serve millions of passengers and create hundreds of billions of dollars of value each year. In 2012, when the average airfare each way was $178, the airlines made only 37 cents per passenger trip. Compare them to Google, which creates less value but captures far more. Google brought in $50 billion in 2012 (versus $160 billion for the airlines), but it kept 21% of those revenues as profits—more than 100 times the airline industry’s profit margin that year. Google makes so much money that it’s now worth three times more than every U.S. airline combined.

The airlines compete with each other, but Google stands alone.”

I think soon, the free to play shooter market will be like the airplanes business model with all developers racing to the bottom undercutting each other, declaring bankruptcies in the process.

Metal gear solid is a zero to one game and was able to capitalize with its new concepts on the stealth games market. Left Alive by Square Enix is a one to N shadow of Metal Gear and will go unnoticed in history.

Hearthstone is another zero to one game that dominated the digital cards game, other 1 to N card games keep on hatching and disappearing every month without anybody noticing them. 

The benefit of creating a business around a zero to one product is that it provides a semi-monopoly to its creators like that of the google’s search engine or Microsoft’s operating systems on pcs.

The tricky part in monopolies in games is that they are much easier to replicate and improve upon but even a short-lived monopoly is still a very strong incentive for a studio to pursue and aim for. At some point in the future Epic might not dominate the market with fortnite but having that vertical competitive advantage for a while is still worth it.

Let me end this by quoting Peter Thiel and Tolstoy: 

“Tolstoy opens Anna Karenina by observing: “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.”

I’m your host Elizabeth and behind the computer screen is Haitham

Thank you for watching and see you soon.